Applied Security Analysis
Spring 2015
(**All information below is subject to change**)
Jon Salinas and Naveen Bhatia
Email:
Phone:
Fax:
Class location: Uris 301
Wednesday 5:45pm – 9:00pm
TAs:
REQUIRED COURSE MATERIAL
REQUIRED PREREQUISITES AND CONNECTION TO THE CORE
Corequisite: Capital Markets
The learning in this course will utilize, build on and extend concepts covered in the following core courses:
Core Course
Corporate Finance
Financial Accounting
Global Economic
Environment
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Connection with Core
1. Cost of Capital
2. Valuation
3. Financing Options
4. Time value of money
5. Opportunity cost (of capital)
6. The Capital Asset Pricing Model (CAPM)
7. Firm Valuation Model
1. The “accounting equation”
2. Revenue and expense recognition
3. Resources and obligations – measurement and disclosure
1. Risk Management
2. What is Gross Domestic Product and how is it measured?
3. What causes inflation?
4. What causes changes in exchange rates?
5. What are the causes of business cycles?
6.
7.
8.
1.
2.
3.
4.
5.
6.
7.
8.
What are the effects of monetary policy?
What are the effects of fiscal policy?
What is the role of financial markets in the economy?
Managerial Economics
Barriers to entry
Moats
Maximization and thinking on the margin
Analyzing complex decision-making under uncertainty
Decision-based cost analysis
Pricing with market power
Market segmentation and other advanced pricing strategies
Understanding market competition and equilibrium thinking (in the
short-run)
9. Market equilibrium thinking (in the long-run) and barriers to entry
10. Strategic interaction among firms and Nash equilibrium
Strategy Formulation
1. Trade-offs, value-added, efficiencies
2. Creation of value vs. value capture
3. Competing firms
4. Co-optition and Complementors
5. Strategic interaction analysis
6. Diversification and scope
7. Ethics & IBS
8. Behavioral and evidence-based strategy
9. Management
Students will be expected to have mastered these concepts and be able to apply them in the course.
COURSE DESCRIPTION
This course builds on Introduction to Value Investing with an emphasis on practical implication. Students will work in
teams to find appropriate investment idea, perform through primary research, and deliver a pitch to a “portfolio
manager.”
The class is integrated with The Pershing Square Value Investing and Philanthropy Challenge. This competition, begun in
2007, is offered to MBA students to signal the commitment of both Columbia Business School and Pershing Square to
produce talented and knowledgeable graduates who are ready to take on leadership roles to a senior panel of investors.
Winning teams will receive a cash prize with a percentage of those winnings to be donated to a charity of their choice.
All student teams will pitch their ideas to investment professionals three times during the class. Feedback will be
provided on the strength of the idea and the areas of further research required. The last segment of the class will
include presentation skills, simulating the job of the analyst to convince a portfolio manager of the worthiness of an
idea.
ASSIGNMENTS



Teams: Self-select three member groups with a max of one 2nd year student per team.
Participation: Attendance is required on days of outside speakers (TBD)
Idea Selection: First-come basis on Google doc to be distributed by TAs.
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COURSE SCHEDULE
Session
1
2
3
4
5
6
7
8
9
10
11
12
Date
28-Jan
4-Feb
11-Feb
18-Feb
25-Feb
TBD
1-April
8-April
TBD
15-April
22-April
29-April
Agenda
Class Overview / Research Process
Investment Frameworks / Pitch Example
Idea Selection / Pitch Example
Valuation
Key Investment Factors / Components of Presentation
5 Minute Pitches
Philanthropy Discussion
Investment Examples
10 Minute Pitches
Fund/Desk Presentations
Pershing Square Finals
Class Reception
Notes
METHOD OF EVALUATION
Class Participation
Preparation and Content of Investment Pitch
Quality of Presentation Skills
CLASSROOM NORMS AND EXPECTATIONS
Class Participation:
Preparation, Discussion, Organization
Guest Speakers:
This course will involve several buy-side guest lectures; class participation will be crucial to the success of the course.
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